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Case Ends Against Ex-Blackwater Officials

WASHINGTON — The federal government’s three-year prosecution of five former officials of Blackwater Worldwide virtually collapsed on Thursday after charges against three of the officials were dismissed and the other two agreed to plead guilty to reduced misdemeanor charges with no jail time.

Judge Louise W. Flanagan of Federal District Court in North Carolina dismissed all charges against two of the officials, Andrew Howell, Blackwater’s former general counsel, and Ana Bundy, a former vice president; prosecutors agreed to drop charges against a third, Ronald Slezak, a former weapons manager. The two other officials, Gary Jackson, a former president of Blackwater, and William Matthews, a former executive vice president, agreed to plead guilty to a misdemeanor charge related to records keeping. They will each receive three years of probation and four months of home confinement, and pay fines of $5,000.

In 2010, the Justice Department charged the five officials with weapons violations and making false statements. The case was just one of several criminal prosecutions, civil lawsuits and Congressional investigations in recent years involving a company that earned billions of dollars in government contracts after the Sept. 11, 2001, attacks and became indispensable to the Pentagon, the State Department and the Central Intelligence Agency. But it is the only case that led to criminal charges against top former executives of the company.

The charges stemmed from a raid in 2008 by the Bureau of Alcohol, Tobacco and Firearms of Blackwater’s sprawling headquarters complex in Moyock, N.C. Agents seized 22 weapons, including 17 AK-47s. The former employees were charged with trying to hide the company’s purchases of the weapons by making it appear that a North Carolina sheriff’s office had bought them. In addition, federal prosecutors charged that Blackwater tried to avoid export regulations in illegally shipping a cache of short-barrel rifles overseas.

Mr. Jackson and the other four former Blackwater employees were indicted in April 2010 on charges that they had conspired to skirt federal weapons laws and then tried to hide their actions. They were also charged with trying to conceal gifts of expensive weapons to Jordanian officials who were visiting Blackwater’s headquarters at a time when the company was hoping to win contracts from Jordan’s government.

But as the case ground through federal court, defense lawyers argued that the defendants had secretly been acquiring the weapons on behalf of the C.I.A., and so should not be prosecuted for following directions from the government. The defense introduced statements from former C.I.A. officials who said that they knew that Blackwater had been acting at the agency’s direction, and filed motions seeking documents and evidence of the C.I.A.’s role in the weapons deals. The Justice Department denied that the C.I.A. had played any role in directing Blackwater’s weapons purchases, and sought to block the defense from gaining access to C.I.A. files.

Kenneth Bell, a lawyer for Mr. Jackson, said in an interview that “all of the conduct covered by the charges was done for the government, with the full knowledge of the government, and it took three years for the government to remember that.”

The five executives worked for Blackwater when it was owned by Erik Prince, a former Navy SEAL member who sold the company in 2010.

Kelley Gannon, a spokeswoman for Academi, Blackwater’s new name, said in a statement that the case “involves former Blackwater executives, none of whom have ever worked for Academi or the current ownership.”

A version of this article appears in print on February 22, 2013, on page A16 of the New York edition with the headline: Case Ends Against Ex-Blackwater Officials. Order Reprints|Today's Paper|Subscribe